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Comment 3 for Public Meeting to Discuss Universities, Legacy Contracts, and 'But For CHP' under the Cap-and-Trade Program (may1-unilegbutfor-ws) - 1st Workshop.


First Name: Gail
Last Name: Welch
Email Address: gwelch@qualcomm.com
Affiliation: Qualcomm Inc

Subject: Comments from Workshop on "But For" CHP
Comment:
Qualcomm’s Comments to CARB Proposed Adjustments to the
Cap-and-Trade Program’s Treatment of “But For” CHP –May 1, 2013
CARB Workshop, Byron Sher Auditorium, Sacramento, CA
 
Qualcomm thanks the California Air Resources Board (CARB) for this
opportunity to comment on its Proposed Adjustments to the
Cap-and-Trade Program’s Treatment of “But For” CHP.    Qualcomm has
a strong track record in energy efficiency and has helped the state
meet its clean energy goals as an early adopter of Combined Heat
and Power (CHP) since 1995. Our CHP processes utilize natural gas,
which in turn generates electricity for our on-site usage and also
generates waste heat which is further processed through our
absorption chillers to provide industrial cooling water (for air
conditioning of our labs, offices and data centers), as well as
domestic hot water.  We have taken early action in purchasing 20
percent renewable power for our San Diego facilities under the
State’s Renewable Portfolio Standard (RPS) program, well ahead of
our local utility company’s timeline for meeting those renewable
objectives. QUALCOMM seeks to be treated on a level playing field
with other entities who have received allowances and transitional
assistance to help the state meet its cap-and-trade implementation
goals. Below are Qualcomm’s comments on the CARB Proposed
Adjustments to the Cap-and-Trade Program’s Treatment of “But For”
CHP.
 
1)   Application to CARB to be classified as a “But For” Facility. 
 Qualcomm already reports the data that CARB requires in the CAL
E-GGRT Reporting Tool, namely fuel usage, useful thermal output and
electricity production. Therefore, CARB already has the relevant
information to determine that our company meets the requirements of
a “But For” facility. Additionally, this information has already by
verified by an independent, third party, CARB-approved verifier. 
Requiring the “But For” facility to go through a separate process
to submit the same data only prolongs the process and is
unnecessary, particularly given the limited number of entities that
would qualify under “But For” CHP. Furthermore, having the company
apply for an exemption pushes the date for Qualcomm’s exemption
past October, when the Board will adopt the regulations. 
 
2)    Useful Thermal Output terminology (versus steam).  The use of
the term “steam” throughout CARB’s proposal needs to be replaced
with “useful thermal output.” In addition to generating
electricity, Qualcomm’s CHP systems also generate waste heat, which
is not steam. The appropriate wording to describe this heat
generated would be “useful thermal output,” as identified by the
Federal Energy Regulatory Commission (FERC) mandated annual report
that CHP facilities submit to their utility company (attached). 
Additionally, the metric that CARB is using for their proposed
methodology for the “But For” Exemption addresses only steam
emissions (i.e. 0.06244 * MMBtu steam output). This needs to be
amended to reflect all useful thermal output MMBtu (including waste
heat, which applies to Qualcomm).

3)      Need to ensure there is no double dipping.  Because
Qualcomm both generates a significant portion of its electricity
and purchases a significant portion of its electricity, we receive
invoices from both the utility (for the transportation and
distribution of the commodity) and from our third party providers
(for the natural gas commodity and the electricity commodity). The
process of paying for implementation costs of cap and trade and the
allowance costs that are passed through to users like Qualcomm must
ensure that there is transparency in identifying exactly who is
responsible for obtaining the allowances and how that allowance
cost is passed through. There should be no double dipping of costs.

 
Likewise, the awarded allowances to the utilities should clearly
identify how those benefits are passed through to all users. If it
is in the commodity cost (instead of the transportation and
distribution cost component), then those who purchase the commodity
from a third party provider receive no benefit, while others who
purchase the commodity from the utility company would receive the
benefit.  CARB should seek to create an equal playing field in this
regard. 
 
4)     2nd Compliance period transition assistance is needed.  “But
For” CHP users need to be on a level playing field with other
entities that have received allowances beyond 2015; otherwise we
will be paying more per kilowatt hour to generate electricity than
we would if we were to buy the same electricity from the grid. The
utilities have received allowances for 2015 and beyond for their
electricity generation, which helps reduce their cost of generating
that kilowatt hour. Without transition assistance beyond 2015, “But
For” CHP entities are at a disadvantage for the cost of producing a
kilowatt hour of electricity. It does not make sense for big
electricity generation entities to get transitional assistance
while the smaller generation facilities who have been early
adopters of energy efficiency and renewable energy, and helped the
State meet its energy goals, receive none.  
 
5)    Early action recognition is missing. Qualcomm not only
generates its own electricity but purchases a significant portion
of its electricity commodity requirements as well. For many years,
Qualcomm has obtained its purchased electricity commodity from a
third party provider under the State’s “Direct Access” program.
From the start, Qualcomm has complied with the State’s RPS
requirements, and we took early action to meet the RPS requirement
of 20 percent Renewable Energy by January 1, 2010 – meeting it long
before our utility company was able to. As a result, we have been
paying more for each kilowatt hour of our electricity. Qualcomm’s
early action in being proactive on CHP and in helping the State
meets its RPS requirements has not been recognized, while others
who  simply purchased offsets  while continuing to emit higher
levels of greenhouse gases are getting an early action benefit. 
Again, this penalizes Qualcomm’s early efforts to help the state
meet its energy objectives.

End of Comments – See  attached Utility “FERC” form.
 

Attachment: www.arb.ca.gov/lists/com-attach/5-may1-unilegbutfor-ws-AGJSOFw8VWgGa1cI.pdf

Original File Name: Blank FERC.pdf

Date and Time Comment Was Submitted: 2013-05-20 09:27:03



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